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Labour Law - Unfair dismissal

Free essay example:

Part One

A.Alex has worked for ILL (International Leisure Location plc) a chain of leisure and sports clubs as a Sports Coordinator for 30 years. When he started working for ILL men and women had different retirement ages: 60 for women and 65 for men. Once this became unlawful, in 1986 retirement ages were equalized at 60. The trade union which was recognized by ILL negotiated an agreement that existing employees were given the option of retaining 65 as their retirement age, or moving to 60. Alex was one of a number who chose 60. Since 1986 it has been the practice of ILL to allow Sports Coordinators who wished to work on past 60 to take an annual medical and, if they passed it, to work on for an additional year, year by year, to a maximum of 65. Around 75% of Sports Coordinators have taken this option, with 90% of those working until they were 63. Alex will be 60 in September 2008. He has taken the medical examination and passed with the lowest score possible. His work record shows that he has been off with a number of illnesses over the past 2 years, totaling around 10 days each year. There have been two complaints against him by customers alleging failure to follow proper safety procedures in the last six months, both of which have been upheld and he has received two verbal warnings.

Alex very much wants to work on after his 60th birthday and wishes to work until he is at least 65. He has been disturbed by comments made to him by his line manager and the human resource manager which seemed to anticipate he would be retiring in September.

Discuss the law as it applies to Alex. Explain his legal rights and any procedures required to be followed by the employer. Explain what protection if any the law of unfair dismissal and the law of discrimination offer to him. (50% of the marks)

In the situation described, certain legal rights may be available to Alex under the law of unfair dismissal. Under ss. 94-132 of the Employment Rights Act 1996, every employee has the right not to be unfairly dismissed.

Although Alex has not yet been dismissed, it is likely he could be for the reason of retirement, which falls under one of the potentially fair reasons of s. 98(2) of the Act.

The first question to consider in this type of dismissal is whether the employer can show that the reason is retirement as defined by the ERA, ss.98ZA-98ZE. This in turn depends on whether there is a normal retirement age in the contract of employment.

If the employer retires the employee before the age of 65 it will be classed as unfair dismissal, unless the he can objectively justify his actions, or there is a normal retirement age. In the case of Alex, his employers might retire him at the age of 60.

This leads to the next consideration, which is whether or not there is a normal retirement age. The normal retirement age (NRA) is defined in s. 98ZG of the ERA as the age at which other employees working for the same employer are normally required to retire. The normal age will usually mean the contractual age, which is the age as stated in the contract. This is evident from the case of Wall v British Compressed Air Society[1], in which the employee was dismissed at the age of 67, and claimed unfair dismissal as his contract provided a retirement age of 70. It was held that the normal retirement age was the same as the age stated in his contract, as he held a unique position in the company and therefore could not compare retirement age against other employees. In the case of Alex, it seems his contractual age is 60, as this is the age which he chose during trade union negotiations.

However it can sometimes be shown that in practice, if the contractual retirement age is significantly departed from, then this is the normal retirement age. The leading case on this matter was originally the Court of Appeal decision in Nothman v Barnet London Borough[2], which held that the NRA was the minimum age at which an employee could be requiredto retire, as distinct from when employees usually retire in practice. The case of Waite v GCHQ[3] also followed this principle. In this case the minimum retirement age was 60, but the employers had the discretion to keep employees on until the age of 65. The employee claimed unfair dismissal when he was dismissed at 60, however it was held that the normal retirement age was not equal to the contractual age, and there was no evidence that in practice, employees would ordinarily continue working up to the age of 65. Here, Lord Fraser stated that if it can be shown that the CRA has been abandoned for the NRA then this is acceptable, but as only one quarter of comparable employees in the Waite[4] case continued working past 60 this was not enough to ‘abandon’ it. This case is similar to the situation described, as it has been the practice of ILL for 30 years to allow employees to continue working until they are 65, as long as they have passed a medical. As 75% of other sports coordinators have taken up this offer, and 90% have worked until they are 63, it seems that this is a significant amount of comparable employees to show that the contractual age of 60 has been abandoned. If it was shown that there was a variety of different retirement ages, it could be found that there was no NRA, however there is no mention of the various ages in the situation described.

Therefore it seems that 63 is the normal retirement age. However, as this is below the age of 65 the employer must justify it as a proportionate means of achieving a legitimate aim, otherwise it will be age discrimination. As Alex works in the sports industry he could be required to keep fit and healthy, which may be justification for the lower NRA. This is apparent from the medical which employees must pass after the age of 60 if they wish to continue working. Therefore, if Alex was dismissed at 60 he could claim unfair dismissal, as it is below the normal retirement age.

In order for ILL to retire Alex without facing an unfair dismissal or age discrimination claim, they must comply with the retirement procedure, set out in the Employment Equality (Age) Regulations 2006. Under schedule 6 of these regulations, employers have three main duties: to notify the employee of the intended date of retirement; to notify the employee of his right to request to work beyond this date; and to consider this request, and give a right of appeal if refused.

The first step is for the employer to notify the employee of the intended date of retirement, which must be given in writing not more than one year nor less than six months before the dismissal takes place.  Although Alex’s managers have made comments to him about retiring in September 2008, there is no mention of any notification in writing from ILL. If they have fail to inform Alex of his intended retirement date within the stated period, they still have a continuing duty to notify him up until 14 days before his retirement. If ILL inform Alex in writing within this time the correct procedure will have been followed, and no duty will have been breached.

Under paragraph 2 of the regulations, ILL also have the duty to inform Alex of his right to request not to retire on the intended date. If they do not inform him of this it will amount to a breach of procedure, leading to automatically unfair dismissal. As Alex wishes to work on past his sixtieth birthday, he can make a request to do so under paragraph 5 of the regulations. He must notify ILL in writing, proposing an indefinite extension, a stated period or a new retirement date. Upon receiving this request, the employer has a duty not to retire the employee until it has been considered. When considering Alex’s request, ILL must hold a meeting with him within a reasonable period, and inform him of their decision as soon as is reasonably practicable.

The third step in the procedure which must be followed is for the employer to give the right of appeal if the request is refused. This must be made within 14 days, and should be in writing. The employer must then hold an appeal hearing, and notify the employee of its decision within a reasonable period.

However, as discussed above, if ILL use retirement as the reason for Alex’s dismissal in September 2008 he can claim unfair dismissal, as it will take place before he reaches the NRA of 63. One potentially fair reason for his dismissal could be capability, for the reason of ill health. Alex has been off with a number of illnesses over the past 2 years, totalling around 10 days each year, and has also passed the medical exam with the lowest score possible. In the case of Lynock v Cereal Packaging [5] , the employee had several unrelated short term absences, which is similar to Alex’s case. If ILL wish to dismiss him for this reason they must first ensure they have investigated the nature of the illness and the impact it could have on business and other employees.

ILL could also chose to dismiss Alex for inability to do his job or conduct, as he has had two complaints against him by customers alleging failure to follow proper safety procedures in the last six months, which have both been upheld and he has received two verbal warnings. In this case they would have to apply the ‘Burchell test’, which requires a genuine belief for the reason for dismissal, reasonable grounds for that belief and reasonable investigation. If ILL do not apply this the dismissal will be unfair. A case in which the Burchell test was applied is Taylor v Alidair[6], when a pilot was dismissed for damaging a plane while landing, which was held to be fair.

In conclusion, if Alex wishes to rely on the law of unfair dismissal he can do so if his employers dismiss him for reason of retirement when he turns 60, as it is below normal retirement age. He could also claim unfair dismissal if ILL do not follow the correct retirement procedure. However, protection of unfair dismissal may not apply if he is dismissed for the potentially fair reasons of capability or conduct, as long as the employer has investigated fully before taking any action.

Part 2

Explain and discuss the importance of the statutory disciplinary and grievance procedures in the law of unfair dismissal, and discuss the reasons behind their introduction and the reasons for their proposed repeal. (50% of the marks)

Statutory disciplinary and grievance procedures are a significant factor in employment, and contribute in solving the majority of workplace disputes. The introduction of these procedures will be considered here, focussing on the reasons for their proposed repeal. In doing so, the reason for their introduction will also be considered, and any major effects of the repeal will also be taken into account.

The Employment Act 2002 (Dispute Resolution) Regulations came into force on the 1st October 2004, and had a profound impact on both employers and employees. These were introduced to encourage employers and employees to discuss problems first, before resorting to tribunals.

Under the regulations, all employers have to have minimum statutory procedures in place for dealing with dismissal, disciplinary action and grievances in the workplace. Each procedure consists of three steps: an initial letter, a meeting and an appeal. In relation to the grievance procedure, the  employee firstly must put down in writing the nature of the alleged grievance for the employer. The employer must  then invite the employee to a meeting to discuss the grievance. After this, the third step is for the employer to inform the employee about the decision, and offer them the right of appeal. If the employee considers that the grievance has not been satisfactorily resolved, they must inform the employer that they wish to appeal. An appeal meeting will then be held, and the final decision made. This procedure is much the same for an employer taking dismissal or disciplinary action against an employee, with the need to provide a written explanation of the circumstances which led to the action. Under the current law, it is vital that the correct procedure is carried out. This is because in a case of unfair dismissal, an employment tribunal will check that the employer has followed these procedures, and if not will make an automatic finding of unfair dismissal. Likewise, in most cases a tribunal will not accept a claim if the employee has not first sent a grievance letter and waited a specified period.

The original policy behind these statutory procedures was first set out in the 2001 consultation paper ‘Routes to Resolution[7]’. This proposed three principles for a modern dispute resolution system: access to justice; fair and efficienttribunals; and a modern, user friendly public service. The 2004 regulations were then created, modifying the existing law. Since their introduction, a clear framework for employers and employees has been provided to deal with any difficulties which may arise as part of their working relationship. This is necessary to ensure that issues are dealt with fairly and reasonably, and that everyone is treated in the same way. The statutory disciplinary procedures are especially important, as they inform employees of the processes and consequences if their standard of performance is not up to what is expected, or what is set out in their job description. The process also identifies any obstacles to the individual achieving the required standards (for example training needs or unclear job requirements), and enables appropriate action to be taken. In addition, the grievance procedures are also necessary as they provide employees with a suitable course of action should they have a complaint, as well as points of contact to resolve any issues of concern.

One of the main benefits of the statutory procedures is that employers and employees now have more clarity about the steps they must follow when pursuing a disciplinary or grievance procedure, and has resulted in more training for workers to handle these situations in an efficient manner[8]. Despite this, the 2004 regulations have been widely criticised, and some claim they have failed to meet many of their main objectives.

One of the central arguments against the regulations is the complexity of the procedures which both employees and employers are required to follow. The three step process was intended to be simple, but in practice the detailed requirements are complex and difficult to understand. The use of the procedures has also had the effect of formalising disputes that would have been better dealt with informally. This is because if not properly followed, an employer faces having a dismissal found to be automatically unfair, while an employee may find that a tribunal refuses to accept their application. This can also lead parties to focus on ensuring the provisions are correctly fulfilled, rather than on ways of resolving the problem itself. For small businesses, the procedures have been especially problematic as they tend to work in a more informal environment, and the requirement to express problems in writing can act as a ‘trigger for greater conflict [9]’ .

Another objective which the regulations have failed to achieve is a reduction in the number of tribunal claims, and some even argue that since its introduction the number of disputes have increased[10]. Further evidence also shows that the current dispute resolution system is costly to both parties in terms of money and time, and costs the government around £120 million per year.

These criticisms have led the government to consider repeal of the statutory dispute procedures. In March 2007 just three years after the regulations were introduced, the Department of Trade and Industry (DTI) published an independent review of the dispute resolution procedures. The Gibbons Review[11]  recommended the repeal of the procedures in their entirety, and made a number of recommendation for the government to consider. These were to produce clear, simple, guidelines on grievances, discipline and dismissal in the workplace for employers and employees, and to ensure that incentives are provided to comply with the new guidelines. He suggested that this could be done by maintaining and expanding employment tribunals’ discretion to take into account reasonableness of behaviour and procedure when making awards and cost orders.Gibbons also recommended that the governmentchallenge all employer and employee organisations to commit to implementing and promoting early dispute resolution.

If the statutory dispute resolution procedures were to be repealed, the current statutory provisions on unfair dismissal would also be affected. This is because the nature of the legal protection against unfair dismissal was altered when the 2004 statutory procedures were introduced. This could mean that breaches of procedure in unfair dismissal may revert back to the pre-2004 position, and in particular the principle of Polkey v AE Dayton Services[12]. This case considered the ‘no-difference principle’ established in British Labour Pump v Byrne[13], which stated that if there was an irregularity in the way the dismissal procedure was carried out, but it could be shown that it would make no difference to the outcome if applied correctly, then the dismissal would be fair. However, in Polkey[14] this principle was overturned, meaning any procedural failings would render a dismissal unfair, except in exceptional circumstances. However, it seems that this change would have a relatively limited impact on the rights of employers and employees, as the position was well-understood before the 2004 regulations came into place.

In conclusion, the 2004 regulations were introduced to resolve workplace disputes at an earlier stage than as known previously, and thus reducing the number of claims reaching the tribunal system. Although some benefits were produced, such as a clearer framework for resolving disputes, it seems that in practice the statutory disciplinary and grievance procedures need vast improvement. Reasons such as complexity, formality and cost have all led to a proposed repeal, pointing to a future model that is more efficient, simpler to use, and offers users more proportionate ways of resolving their disputes earlier.


BERR page on dispute resolution http://www.dti.gov.uk/employment/Resolving_disputes/statutory-dispute-resolution/index.html

Employment Law Simplification Review (2007) http://www.dti.gov.uk/employment/employment-legislation/employ-law/index.html

Freer, A “The Range of Reasonable Responses Test – From Guidelines to Statute” (1998) ILJ 335

Gibbons Report  Better Dispute Resolution : A review of employment dispute resolution in Great Britain (2007) http://www.berr.gov.uk/files/file38553.pdf

Government consultation on changes to statutory procedures (2007) – Success at work: resolving disputes in the workplacehttp://www.berr.gov.uk/files/file38553.pdf

Routes to Resolution: Improving Dispute Resolution in Britain 2001 (DTI)

Sanders, A “Expanding the ‘No-Difference’ Rule in the Law of Unfair Dismissal (2007) ILJ 355

[1] 2004 IRLR 147

[2]Nothman v. Barnet London Borough [1977] I.R.L.R.

[3] 1983 IRLR 341

[4] Ibid.

[5] IRLR 510

[6] IRLR 82 1978

[7]Routes to Resolution: Improving Dispute Resolution in Britain 2001 (DTI)

[8]Gibbons Report  Better Dispute Resolution : A review of employment dispute resolution in Great Britain (2007)

[9]Gibbons Report  Better Dispute Resolution : A review of employment dispute resolution in Great Britain (2007)

[10]  Sanders, A., Expanding the ‘No-Difference’ Rule in the Law of Unfair Dismissal (2007) ILJ 355

[11] See note 9

[12]  Polkey v AE Dayton Services (1987, IRLR 503)

[13]  British Labour Pump Co Ltd v Byrne (1979, ICR 347)

[14]  See note 12

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